Upholstery mfr. Kensington won't resume production
By Gary Evans -- Furniture Today, November 4, 2001
HOULKA, Miss. — Upholstery manufacturer Kensington Furniture has abandoned its plan to stay afloat and will go out of business, according to the company's top executive.
Jim Ruane said last week that the company's board of directors "decided philosophically that they didn't want to go forward" and Kensington will not resume production.
Ruane is a turnaround specialist from PriceWaterhouse-Coopers with extensive experience in the furniture industry. He was brought in by the principal owners, McFadden Brothers, a New York investment firm, to restructure the company. Four of Kensington's creditors, all fabric suppliers, sought involuntary liquidation through Chapter 7 bankruptcy proceedings.
The company instead went into Chapter 11 on July 27, based on a plan by Ruane to secure outside financing, consolidate operations in the company's Mantachie, Miss., facility, and sell off other Kensington plants in Mississippi and North Carolina. Ruane said sales had fallen from a high of $200 million a year to an $80 million pace when the company shut down on June 6.
Before the owners pulled the plug on the 24-year-old company, he had planned to use the Mantachie plant to manufacture two lines each of stationary and motion upholstery and one line of recliners.
"We were all set to roll," Ruane said. "I actually had gone out and taken applications for workers. I was ready to go. It came down to some financing requirements that the board was being asked to do."
He said the unsecured creditor committee "was very supportive about staying in business. They believed we could make it survive. They saw the business plan and thoroughly agreed with what we were doing. There were no issues there. There was never any animosity or fighting. They actually wanted to run all of (Kensington's) Mississippi (plants) and figure out some way to do so. But if the stockholders are burned out, there's not much you can do," he said.
Ruane said that he was "still tallying" creditors' claims and tax issues and did not yet have a definite number on Kensington's debts. Earlier, he had estimated the company had about $20 million in debts and $31 million in assets.
"The dynamic is that you never get as much as you thought (when you sell) and the expenses are more than you thought," he said. "You hope you get out of the thing alive."
In all, Kensington has 1,071,000 square feet of manufacturing space on the block. Ruane said he has contracts on the company's Caraway plants in Sophia, N.C., and the manufacturing operations here in Houlka. Those offers, from within the furniture industry, are subject to upset bids at Kensington's next bankruptcy hearing later this month.
The Mantachie factory has 181,380 square feet of manufacturing space, was built in 1990 and recently was revamped with new machinery and equipment. "It's a good plant," Ruane said. "You could buy this thing as a growing concern, flip the switch and be in production in two weeks."
The plan is to sell the plants, which are appraised at about $16 million, and equipment, appraised at about $6 million, in separate blocks.
"If we can make the market for the plants and equipment and sell them as packages with a workforce that is skilled — then I think we will have something that is good," he said.
| Ruane |
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